October 12, 2008 / 8:12 PM / 11 years ago

U.S. gasoline price marks biggest drop ever: survey

NEW YORK (Reuters) - The average price of a gallon of gasoline in the United States recorded its largest drop ever as consumer demand continued to wane and oil prices slid, a prominent industry analyst said on Sunday.

A resident looks at the price of gasoline at a gas station in Miami's South Beach, Florida April 23, 2008. REUTERS/Carlos Barria

The national average price for self-serve, regular unleaded gas fell 35.03 cents to $3.3079 a gallon on October 10 from $3.6582 two weeks earlier, according to the nationwide Lundberg Survey.

It was the lowest national average price since March 21, 2008. Since peaking at $4.1124 on July 11, the average cost of a gallon of gas has receded by 80.45 cents. Diesel fuel fell 21 cents to $3.95 a gallon, the first time since March that it has been below $4.00 a gallon.

“Plummeting oil prices and caving gasoline demand have combined to bring the biggest retail gasoline price cut in the history of the market,” Trilby Lundberg, who compiles the survey, said in an interview. “We’ve been doing this 58 years. This is truly the biggest price drop.”

On Friday, fears of a global recession helped drive down U.S. crude oil futures prices more than 10 percent to the lowest settlement since September 2007. U.S. crude for November delivery settled on Friday at $77.70 a barrel, down $8.89, or 10.27 percent, on the New York Mercantile Exchange.

Meanwhile, travel on all U.S. roads fell 3.6 percent, or nearly 10 billion vehicle miles in July, compared with the same period last year, according to the most recent figures provided by the Transportation Department. It was the ninth straight month of declining driving activity.

HOW LOW CAN THEY GO?

Lundberg said the average gasoline price could fall below $3.00 a gallon as early as December.

“If crude oil prices don’t spike, we can expect further price cutting for two reasons,” Lundberg said. “Gasoline demand will continue to shrink in our weak economic condition, and retailers, who have been receiving deep buying price cuts, will be anxious to pass through any further price cuts they receive quickly. They need the sales.”

According to the Lundberg survey, drivers in Honolulu paid an average of $3.91 a gallon for unleaded gas, the highest price in the nation. The Wichita, Kansas, region had the lowest average price, at $2.79 a gallon.

The Lundberg survey evaluates prices at about 5,000 gas stations.

Reporting by Ilaina Jonas

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